The evolution of cryptocurrency trading platforms has introduced advanced tools that cater to the diverse needs of traders and businesses. For entities like fintech companies and trading firms, integrating trading tools through crypto-as-a-service solutions is becoming a standard practice. These services typically offer wallet creation, on- and off-ramp solutions, liquidity tools, and automated trading systems. Crypto sub accounts stand out as a highly efficient feature for better fund and account management. Sub-accounts enable users to streamline operations, implement effective trading strategies, and maintain organized portfolios across multiple segments. In this article, we will explore subsidiary accounts in crypto, discuss who needs them, analyze their benefits, and examine the risks involved.

What Are Subsidiary Accounts in Crypto?

Crypto sub-accounts are secondary accounts created under a main (parent) account on a trading platform. These sub-accounts allow the parent account holder to manage multiple trading portfolios or activities without the need to open entirely separate accounts. Essentially, they operate under the same primary account credentials but come with individual settings, permissions, and balances.

Crypto platforms provide advanced tools to allow users to customize these accounts based on their specific needs. Each cryptocurrency sub-account can have unique permissions for access, trading, and funding, which makes them particularly useful for professional and institutional traders. Sub-accounts simplify the process of monitoring and managing complex trading activities under a unified dashboard.

Who Needs Crypto Subsidiary Accounts?

While sub-accounts are available to a wide range of users, they are particularly useful for the following types of traders:

  • Institutional traders. Large organizations, hedge funds, and asset managers often need to manage multiple portfolios simultaneously. With crypto subsidiary accounts, they can allocate funds for different strategies and assign specific permissions to team members while maintaining centralized control.
  • Professional traders. Experienced traders who employ diverse strategies such as scalping, arbitrage, and derivatives trading benefit from sub-accounts to segregate their trades. By isolating positions in different accounts, they can manage risk effectively and avoid cross-portfolio confusion.
  • Businesses and fintech companies. Companies offering trading tools or services can use sub-accounts to organize operations for their clients. For example, having integrated crypto exchange tools into its platform through API, a fintech company enables its clients to trade securely and independently under a single managed platform.
  • Trading teams. Groups of traders collaborating on specific projects or strategies can use cryptocurrency sub-accounts to delegate tasks and monitor individual performance without sharing the main account credentials.
  • Retail traders with multiple strategies. Retail traders who operate multiple strategies, such as holding long-term positions while engaging in short-term trades, benefit from sub-accounts to keep these activities organized and distinct.

Reasons to Set Up a Crypto Sub Account

The benefits of crypto sub-accounts are numerous, making them an essential tool for advanced trading management. Below are the key advantages:

  • Portfolio segmentation. Traders can create sub-accounts to divide their funds into separate portfolios for specific trading strategies. For example, one sub-account can focus on spot trading, while another is used for futures or margin trading.
  • Risk management. By isolating trading activities into distinct sub-accounts, traders can reduce the impact of losses from one strategy on their overall portfolio. If a trade in one account underperforms, the balance in other sub-accounts remains unaffected.
  • Permission customization. Crypto subsidiary accounts offer customizable permissions. Account holders can assign roles such as “view only,” “trading access,” or “fund transfer access” to team members, ensuring greater security and control over the accounts.
  • Improved trading efficiency. Sub-accounts simplify the process of monitoring performance and managing funds. Traders can easily track profits, losses, and account performance across multiple strategies without switching between platforms or accounts.
  • Convenient fund transfers. Platforms offering cryptocurrency sub-accounts typically allow seamless transfers of funds between sub-accounts. This feature improves liquidity management and reduces the need for complex manual fund movements.
  • Enhanced security. With separate permissions for each sub-account, the risk of unauthorized access or operational mistakes is minimized. Additionally, if a breach occurs in one sub-account, the other accounts remain secure. However, it is important to note that all sub-accounts remain linked to the primary account, so safeguarding the main credentials is crucial to ensure overall security.
  • Trading strategy isolation. Sub-accounts are particularly beneficial for traders executing multiple strategies simultaneously. For example, a user could engage in algorithmic trading in one sub-account while manually trading in another.
  • Tax and accounting simplification. By segregating activities, sub-accounts simplify accounting and taxation processes. Traders can clearly distinguish profits and losses across different trading activities, making tax reporting easier.

Risks Associated with Cryptocurrency Sub-Accounts

While crypto sub-accounts provide significant advantages, they also come with certain risks that traders should consider:

  • Operational complexity. Managing multiple crypto accounts may become overwhelming for traders who lack the experience or tools to oversee numerous portfolios simultaneously. Poor management can lead to inefficiencies.
  • Over-leveraging. Sub-accounts with margin or futures trading capabilities may encourage traders to over-leverage their positions across different accounts, increasing the risk of liquidation.
  • Security risks. Although sub-accounts provide customizable permissions, they are still linked to the main account. If the primary account credentials are compromised, all associated sub-accounts could also be at risk.
  • Human errors. Mismanagement of funds or assigning incorrect permissions can lead to mistakes such as unintentional trades or fund transfers.
  • Platform limitations. Some platforms may impose restrictions on the number of sub-accounts, transfer limits, or specific features. Users should ensure the platform they choose aligns with their requirements for crypto subsidiary accounts.

Crypto sub-accounts are a valuable feature for institutional, professional, and retail traders, offering efficient portfolio segmentation, improved risk management, and enhanced control over trading activities. However, traders should approach sub-accounts with caution, considering the operational complexity and potential security risks. By utilizing cryptocurrency sub-accounts effectively and securely, traders can streamline their strategies and maximize their trading performance while maintaining a high level of organization and control.